Technology ends in the southern Pacific Ocean,

Technology and trade
waits for no man. But without the resources to develop ports and its prerequisite
facilities, road or rail connectivity and develop human capital, how would a
nation capitalise on the growing global wealth? Beg, borrow or suit up for
China’s Belt and Road Initiative (BRI).

 

A seemingly noble
cause, yet the BRI has received numerous mixed reactions, largely scepticism
from the more advanced nations. To the less advanced and economically
challenged nations, it represents a life-line to hasten growth and
socio-economic advancement.

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While the jury is
still out on its implicit purpose and the political, financial and
socio-economic implications, China is rapidly forging ahead with its plans,
creating trade alliances, building and improving infrastructure and financing
mega projects in various countries to realise its dream.

 

 

A
trillion dollar plan

 

In what
is panning out to be perhaps the largest regional collaboration yet, the BRI
will cover about 65 per cent of the world’s population, affecting one third of
the world’s Gross
Domestic Product (GDP) VAC1 and 35 per cent of
the world’s trade. Mooted in 2013 by China’s President Xi Jinping, the
initiative is being romanticised as a resurrection of the ancient Silk Route
that facilitated trade activities between China and Eurasia.

 

The BRI
comprises two components?the land-based Silk Road Economic Belt and the sea-based
Maritime Silk Road. One route passes through the Indian Ocean and ends in
Europe, while the other ends in the southern Pacific Ocean, targeted to cover
80 per cent of the world’s trade by 2050. 

 

The
entire project is estimated to have a capital requirement to the tune of US$2-3
trillion j2 over the long term to realise the infrastructural and
logistical connectivity spanning across 65 countries, from Asia to the Middle
East, Africa and Europe.

 

The
project covers five major areas of interest: infrastructure development, trade
liberalisation, financial integration, policy co-ordination and stronger
people-to-people ties.

 

The Chinese
government has also pledged to work with the government of countries along the
BRI routes to plan six economic corridors, namely China-Mongolia-Russia
Corridor; New Eurasian Land Bridge; China-Central Asia-West Asia Corridor;
China-Indochina Peninsula Corridor; China-Pakistan Corridor and
Bangladesh-China-India-Myanmar Corridor.

 

These economic corridors are expected
to facilitate economic
growth in these regions by
2050, advancing more than 3 billion of its population. j3 

 

Of these, the US$62
billion China-Pakistan Corridor is one of the largest and is regarded as a
flagship project, with China’s investment amounting to 20 per cent of
Pakistan’s GDP. 

 

The proposed corridor
is expected to connect Kashgar in Xinjiang in China’s far west with the Port of
Gwadar in the province of Baluchistan, Pakistan. Given the port’s proximity to
the Persian Gulf, it is anticipated to be used as a transhipment point for
China’s energy supplies. A network of pipelines
to transport liquefied natural gas and oil will also be laid as part of the
project, including a US$2.5 billion pipeline between Gwadar
and Nawabshah to eventually transport gas from Iran.

 

 

The
BRI boost in Malaysia’s development thrust

 

The Malaysian
government’s endorsement of the BRIhas attracted Chinese investment to the tune
of billions of dollars into real estate, ports, high-speed rail lines,
manufacturing and technology ventures in Malaysia spurring growth and creating the
much-needed thrust towards achieving a high-income nation status by 2020.

 

The South China Morning Post reports that
data from the China Global Investment tracker website showed promised Chinese
investments of US$17.2 billion earmarked between 2010 and June 2016. Following
the Prime Minister Datuk Seri Najib Tun Razak’s visit to China in late 2016,
US$34 billion worth of economic deals were reportedly signed including the
US$10 billion Melaka Gateway port, US$13 billion East Coast Rail Line, and a
US$920 million expansion of the Kuantan port.

 

His visit to China
mid last year led to the successful inking of nine Business-to-Business
Memoranda of Understanding worth US$22.7bil (RM92.39bil) in construction,
agriculture, financial market, infrastructure and investment cooperation. Alibaba
also recently announced the setting up of its regional distribution hub in
Malaysia.

 

“The BRI would derive
massive benefits to Malaysia in terms of excellent infrastructure,
connectivity, social facilities, better living standards and abundant business
opportunities,” Najib told the press following the signing.

 

While some quarters
warn of loss of national sovereignty and the risk of higher debt burdensVAC4 , others welcome the
easy credit obtained from the Chinese investors as it provides the much-needed
thrust for Malaysia’s development plans.

 

In his analysis of
the BRI’s impact on Malaysia, Philip Teoh, Partner and Head of International
Trade and Shipping at Azmi and Associates opines that Malaysia is better-placed
than most of its ASEAN neighbours to embrace the opportunities created by the
surge of infrastructure development and trade deals that come with increased
Chinese overseas investment and participation in these areas.

 

“Besides being
well-positioned geographically in the ASEAN region owing to its hold on the
Straits of Malacca, Malaysia also benefits from a particularly strong transport
and logistics infrastructure and ecosystem that draw businesses,” he adds.

 

 

Is China positioning
its pawns?

 

Economists, industry
players and policy makers around the globe cast little doubt that the
overarching objective of the BRI is to help China achieve its geopolitical
goals by economically binding China’s neighbouring countries more closely to
Beijing.

 

However, President Xi
has said that China will abide by its ‘three no’s’ policy?no interference in the domestic affairs of
foreign countries, no expansion of Beijing’s ‘sphere of influence’, VAC5 and no asserting of dominance.

 

With China funding
much of the development of seaports along the shipping route for its imports of
oil, it is well positioned to take partial or full control of strategic ports. This
is further fuelled by its need to secure energy resources
and ensure its safe passage as it emerges as the top oil consumer in the world,
according to the International Energy Agency.

 

Thus there are concerns
over China’s dominance over strategically-located ports, which will not only see
the safe transportation of its oil needs and various other commodities but could
also facilitate a military presence.

 

Politics aside, the
BRI has also been viewed as China merely seeking out markets for its industrial
boom as the engines of its local economy have begun slowing down.  This is in line with the key aims of BRI:
encouraging regional development in China through better integration with
neighbouring economies; upgrading Chinese industry while exporting Chinese
standards; and addressing the problem of excess capacity.

 

To
reinforce its ‘prosper thy neighbour’ objective, China has made commitments to
import US$2 trillion worth of products from countries participating in the BRI
in the next five years.

 

 

Sidebar:

One
Belt, One Road: Reshaping Global Trade    

 
The Belt and Road
Initiative is expected to change the world’s economic landscape through the
development of countries along their routes, most of which are eager for new
growth.
 
Countries Involved
·       
Involves 65
countries and regions, mostly developing countries
·       
4.4 billion people
(63 per cent of the world’s population)
·       
GDP: US$23 trillion
(30 per cent of the world’s total GDP)
 
Cooperation
Priorities
·       
Policy Coordination
·       
Infrastructure
Construction
·       
Investment &
Trade Cooperation
·       
Financial
Cooperation
·       
Promotes Exchange
 
Sources: Global Times, Xinhua, Hong Kong
Trade Development Council, 21st Century Business Herald
 

 

 VAC1Editorial
Team: Inserted full version, Gross Domestic Product

 j2Cannot
find source online. Suggest to add “over the long term” to sound more general.

Editorial Team: Here are the sources:

1. Citation: “China’s One Belt, One Road: Will it
reshape global trade?” McKinsey

Podcast, McKinsey & Company, Ngai, Joe; Sneader,
Kevin

https://www.mckinsey.com/global-themes/china/chinas-one-belt-one-road-will-it-reshape-global-trade

2.Citation: Kim Catechis, Head of Emerging Markets,
Legg Masonn Global Asset Management

https://www.leggmason.com/en-us/insights/investment-insights/one-belt-one-road-part-3.html

Ok with adding ‘over the long term’

 

 j3To
double check on the percentage. Which GDP growth is referring as you have
mentioned another world’s GDP in 4th paragraph. Please clarify.

Another suggestion from INV: to change GDP growth to
economic growth.

Editorial Team: The writer is referring to the GDP
growth of the regions within the six economic corridors. Source:

China’s Belt and Road: What’s in it for Malaysia?

Suggestion à
To change sentence to the following:

These economic corridors are expected to facilitate
huge economic growth in these regions (delete-to 80 per cent) by 2050,
advancing more than 3 billion of its population.

 VAC4Editorial
Team: Fixed spelling and grammar

 VAC5Editorial
Team: Fixed quotation marks and changed to single quotation marks